Exploration of Digital Evolution in the Chemical Industry

Digital and cloud are two of today’s big buzzwords. However further than those words is real technology, which is accessible and tangible today to propel businesses and the industry entirely. You have the chance to advance operations and behaviors to make the unconventional changes.

These changes are predictable to a business future profitability and operations. Traditional business models are being challenged. New technology is entering the game; however it can be challenge to amalgamate into present operations. Reimagining business models, methods, and how people work will make a big change in how competitive a business can be in the future.

How to get to the location?

The confronts and the opportunities for a new business models, services, and products can make issues. Modernization is speeding up; the issue is that there is no existing roadmap to get from one maturity stage or level to the next.

An improved analogy would be the historic explorers who used a star navigation or a compass to figure out where they were headed.  In today’s move towards digital modernization, you have a direction, even when you are walking into entirely new territory. Businesses require abandoning limited, traditional thinking during that journey. Saying no to go on the journey of digitalization and modernization will just leave you disrupted.

Reconsidering the Industry:

In the past, the industry has been based around demand for specific chemicals. Now you are seeing a shift from products sold in high-volume, well-margined markets. Digital evolution is streamlining the industry. Its changing commodity chemicals markets plus specialty chemicals are now being customized to their end application.

A third tier is expanding beyond commodity and specialty markets, centering on the adaptable molecule. Molecular structures can be mapped, alike to a genome, and permit the industry to develop chemicals tailored for very particular purposes and customers.

Along with these new options, chemical companies are losing ground and should be reimagined to remain competitive. New competitors are mechanizing up all over the world. The commodity companies should get use to or lose out. However whether they move upwards or downwards in the value chain, a new business model is significant to success.

Example:

A chlorine company looked at its major customers. Rather than remaining in the commodity chemical business, it changed to producing sensor-based automatic supplying machines.  This made it much easier for consumers to keep their water chlorinated without testing and extra work. Rather than having to price based upon chlorine, the company could price based upon value (pool cleanliness), as per  market research reports.

Nut shell:

In-memory cloud and engines computing add extraordinary levels of granularity and speed to data analytics and processing, assisting you to gain real-time insight into things like as asset performance across your or your customer’s network to help to make service oriented and innovative business decisions.

Frac Sand Market: What to expect for future?

frac-sand-marketIn the recent decade, the frac/ silica sand market have experienced tremendous growth and is also expected to grow at 10.29% CAGR in 2016 to 2020.The North American shale oil and gas production has grown since 2010 and it is further bringing many opportunities that were absent in the silica sand industry.

The Frac Sand Market in North America two years ago, was twenty times larger than it was a decade earlier, as per a Chemicals market report.

Recent crash in the market

However, at the end of 2014, consumption began to decrease as the oil and gas prices began to decline all over the world. Therefore now, instead of planning to explore new business expansions, the suppliers have inactivated the production and mining operations. The stock price of the American largest Frac sand manufacturer plummeted from USD 16.98 at the time of its Initial Public Offering in 2014 to a low amount of USD 1.23 in January of 2016.

Reason for optimism

Although, the figures are plummeting, there are many reasons to be optimistic. –

Primarily, the drillers are using more frac sand per well, due to which the volume of demand continues to grow. Packing surplus sand into the existing and new wells allows the shale gas manufacturers to extract the additional resources at the minimal extra expenditure. This strategy is more likely to be used in the future as well.

Secondly, due to its higher crush strength and comparatively low dust discharge, the resin coated sand is gaining traction in the market share. The resin sand is also sold at a higher price, which will in turn help the sand producers’ profit margins and contradict the lower amount of sales.

Finally, the OSHA silica exposure rule will take effect in the coming year. Therefore, this could be an opportunity for manufacturers from different industry verticals to try resin coated sand as a low dust alternative to the uncoated sated.

As per Market Research Reports, even though the boom period is over, the ‘bust’ time is also through in the frac sand industry. The market is estimated to improve in the long term basis as the drilling picks up.

As per the Chemicals Market Report, the suppliers that have classified their consumer base into steadier market, for e.g. producing products, chemicals and flat glass will be at an advantage of recovery based on their financial position. Moreover, there are various opportunities for frac sand manufacturers outside of North America. One such opportunity lays in Argentina, which is at the cusp of their Shale boom. This could provide an additional outlet for suppliers.